Will 2024 be a good year for the French Web3?

At a time of risk aversion and uncertainty about the contours of this heralded new version of the Internet, Web3 players are faced with a dual challenge: to demonstrate their economic utility and to fit in with the legislative and regulatory developments sweeping through the digital economy.

To meet this dual challenge, Web3 will quickly have to be accompanied by guarantees concerning the robustness and security of its model, and submit to a new form of controls that supervisors will wish to carry out on certain transactions that will be operated there.

With a "crypto" ecosystem that has been developing in France for nearly five years, consisting mainly of exchange platforms and technological security providers, Web3 players will be able to draw on the depth of the French market in their search for growth levers.

They should undoubtedly not be the only ones to benefit from the opportunities of this digital transition. Institutional players, particularly financial players, could also contribute their expertise, for example, in payment execution and mastering regulatory constraints. Witness their numerous initiatives and counter-offensives in blockchain, both public and private, and their first steps observed even recently in the cryptoassets market.

Boosted by the impetus of the public authorities, who are working to ensure that France makes a more successful transition to Web3 than it did to the Internet some thirty years ago, we need only observe the presence of banks, custodians and, more broadly, the financial sector, in the work of the market and European negotiations. Indeed, they seem to have incorporated into their long-term strategies, the evolution of exchanges and the emergence of new digital instruments such as crypto-currencies, stablecoins, and other NFTs.

The law, a weapon when it comes to attractiveness?

What remains to be seen is what will dominate after the avalanche of regulation already underway at European level alone? The European MiCA regulation, applicable to the cryptoasset market, will begin to come into force from this summer, which should result in the consolidation of the market for providers and issuers, and the emergence of a few players who could impose their standards, against their foreign competitors.

Similarly, DORA, the flagship cybersecurity regulation for the European financial sector, will apply from January 2025, and should gradually force the "crypto" providers that will also be subject to it to align their operational models on a common line in terms of operational resilience.

Faced with this recomposition of the market underlying the Web3 world, which is expected to largely take the routes of blockchain protocols and all manner of cryptoassets, investments could then be directed towards the best pupils in terms of digital trust.

While France has been a pioneer in terms of regulation in this area, the country could undoubtedly benefit from a certain attraction for investments in Web3 over the next few years. The law could thus serve as an offensive weapon in terms of attractiveness, and recreate confidence within a new ecosystem seeking legitimacy and growth.